Ofgem secures commitments from npower to resolve billing issues

Ofgem, the Office of the Gas and Electricity Markets, which supports the UK’s gas and electricity industries regulator, the Gas and Electricity Markets Authority, revealed on Thursday that it has warned UK based npower that it may have to cease all proactive telesales activities to new customers unless the energy supplier resolves major billing issues and publishes monthly progress updates on its website.

The regulator said npower must meet monthly targets between now and the end of August this year to reduce late bills. The investigation into prolonged billing problems and complaint issues has been made by Ofgem following its intervention in December 2013, which resulted in npower’s CEO Paul Massara apologising to all the firm’s customers. The company also made a payment of GBP1m to good causes and promised that customers would not be left out of pocket because of failures in its billing system. Since December, longstanding problems in relation to new customers and the set-up of direct debit payments are said to have been addressed, while many of the oldest cases of late billing have been cleared. However, Ofgem said that whilst npower has made some progress, there are concerns that the company has not yet resolved billing and complaints issues to the degree that the regulator expected to see. It received almost 1.4m complaints in 2013, 1 for every 4 customers.

Ofgem has also launched a wider investigation into customer service failings under its new Standards of Conduct (SoC), part of Ofgem’s reforms for a simpler, clearer and fairer energy market. This parallel investigation could lead to a financial penalty or redress payment if the supplier of gas and electricity is found to have broken rules. The investigation will also look into npower’s compliance with industry complaint handling standards.

Sarah Harrison, senior partner in charge of enforcement, commented: “npower customers have suffered service failures for too long, that’s why Ofgem has secured binding commitments from npower to reduce its bill backlog or face curbs on sales, alongside launching a wider investigation under Ofgem’s new Standards of Conduct.

“Ofgem has been monitoring npower’s service closely and we have been increasingly concerned about the slow progress to tackle failings. npower’s recovery plan has not delivered as far and fast as is necessary. Our analysis of complaints data also raises some serious concerns which will be thoroughly examined in our investigation.”